1. What Is Credit?
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

2. What is Credit? Lesson Objectives:
Compare installment and non-installment credit
Identify the advantages and disadvantages of using credit
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

3. 5 C’s of Credit Worthiness
Character: A person’s honesty and reliability determined by their history of repaying bills on time
Capital: An evaluation of a person’s net worth
Capacity: The income a person has available to repay the loan determined by job longevity and having few other loans
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

4. 5 C’s of Credit Worthiness
Collateral: Property which can be seized if a person does not repay the loan
Conditions: The general state of the economy
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

5. 5 C’s of Credit Worthiness
An individual with these qualities is more likely to be perceived as having the ability and willingness to pay back a loan and will be granted one by a lender
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

6. Two basic types of loans
Installment Credit
A one-time loan which the borrower must repay the amount in a specified equal number of payments
Examples: automobile, mortgages, education loans
Non-installment credit
When credit is extended in advance so the borrower does not have to apply for credit each time credit is desired
Examples: credit cards, department store cards
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

7. When it’s ok to use Credit:
If credit is being used to help a person make money
If the monthly credit balance can be paid in full
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

8. Advantage or Disadvantage?
Credit
Advantage or Disadvantage?
Convenience
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

9. Advantage or Disadvantage?
Credit
Advantage or Disadvantage?
For Emergencies
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

10. Advantage or Disadvantage?
Credit
Advantage or Disadvantage?
For Identification
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

11. Advantage or Disadvantage?
Credit
Advantage or Disadvantage?
To Enjoy the Good Life
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

12. Advantage or Disadvantage?
Credit
Advantage or Disadvantage?
Loss of Privacy
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

13. Advantage or Disadvantage?
Credit
Advantage or Disadvantage?
Add-On Fees
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

14. Advantage or Disadvantage?
Credit
Advantage or Disadvantage?
Make Reservations
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

15. Advantage or Disadvantage?
Credit
Advantage or Disadvantage?
Consolidate Debts
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

16. Advantage or Disadvantage? Increased Chance of Fraud
Credit
Advantage or Disadvantage?
Increased Chance of Fraud
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

17. Advantage or Disadvantage? Take Advantage of Sales
Credit
Advantage or Disadvantage?
Take Advantage of Sales
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

18. Advantage or Disadvantage? Obtain an Education Loan
Credit
Advantage or Disadvantage?
Obtain an Education Loan
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

19. Advantage or Disadvantage? Loss of Financial Freedom
Credit
Advantage or Disadvantage?
Loss of Financial Freedom
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

20. Advantage or Disadvantage?
Credit
Advantage or Disadvantage?
Possibility of Fees
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

21. Advantage or Disadvantage?
Credit
Advantage or Disadvantage?
High Interest Rates
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

22. Advantage or Disadvantage? Take Advantage of Promotions
Credit
Advantage or Disadvantage?
Take Advantage of Promotions
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

23. Credit
Work now to develop a good credit rating so you will be able to receive a loan later
Have a checking and savings account
Apply for a bank credit card or short term loan
Pay off any existing loans
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

24. Lesson Objectives – Review
What is Credit?
Lesson Objectives – Review
Compare installment and non-installment credit
Identify the advantages and disadvantages of using credit
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

25. What is Credit? Assignments:
Advantages and Disadvantages of Credit Scenario A1
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona